Court judgment nullifying ZERA tariff increase could plunge the country into darkness

THE recent Administrative Court judgment nullifying the Zimbabwe Electricity Regulatory Authority tariff increase will plunge the country into darkness if effected, an official has said. ZERA chairman Mr Canada Malunga told journalists in Harare yesterday that the judgment was an impediment to private

participation in the energy sector and could reverse Government efforts to improve security of electricity supply.

The Administrative Court last Friday quashed the September 2011 tariff increase by ZERA after captains of industry challenged its legality.

"The effect of the judgment as a result of Confederation of Zimbabwe Industries' court action to challenge the 2011 electricity tariffs has not only the potential to plunge the country into darkness.

"If effected, this judgment will reverse the gains recorded and all efforts being made by Government to improve electricity supply," he said.

ZERA is responsible for approving electricity tariffs in Zimbabwe.

Mr Malunga said ZERA had engaged legal experts to assist with the interpretation of the judgment.

"When you look at it, you will find that it is a technical and complex matter hence the decision to refer it to legal experts," he said.

He said because of the complexity of the matter, ZERA would stand guided by the legal experts.

"We will take whatever action in accordance with the legal advice and national interests."

The court ordered ZERA to come up with a new tariff within three months.

ZERA, Mr Malunga said, had received an application for a tariff review from the Zimbabwe Electricity Transmission and Distribution Company.

"We are currently carrying out a cost of supply study for the purpose of coming up with a viable and economic tariff for both electricity supply service providers and consumers alike."

Mr Malunga said the electricity situation in the country had been "desperate" for many years owing to sub-economic tariffs that prevailed particularly during the hyperinflation period.

"This resulted in ZETDC and Zimbabwe Power Company failing to implement basic maintenance of their infrastructure, let alone meeting the import obligations," he said.

ZETDC, he said, had accumulated a power import debt in excess of US$100 million at the beginning of the year.

The debt has significantly been reduced to suit current consumption levels against the prevailing tariff regime.

He said the introduction of multi-currencies had resulted in the improvement of the country's electricity supply.

"Zesa Holdings has put in place firm plans to implement Hwange 7 and 8 and Kariba South power stations extension projects," he said.

Negotiations for these plans were nearing closure and had attracted interest from local and international financiers, he said.

Mr Malunga said ZERA had licensed 11 investors with a potential to produce 5 400 megawatts in the next three to 10 years.

"These power plants are valued at US$10 billion.

"In addition, three mini-hydro power stations valued at US$22 million and with a potential to produce 7.6 MW are at different levels of implementation.

"The implementation of the Gairezi mini hydro power station with a potential to produce 30 MW and valued at US$89 million has started."

CZI contested the new tariff on the basis that when it was approved, the ZERA board was not properly constituted as required by the law.